Bankruptcy Code Current Affairs - 2019
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The Insolvency and Bankruptcy Board of India (IBBI) has notified regulations for inspection and investigation of service providers registered with it.
Under the Insolvency and Bankruptcy Code (IBC) implemented by IBBI, service providers are insolvency professional agencies, entities, professionals and information utilities.
The investigation authority has to serve a notice intimating the entity concerned about the probe at least 10 days in advance. However, this requirement can be done away with on grounds such as apprehensions that the records of the particular service provider might have been destroyed before the probe starts.
About Insolvency and Bankruptcy Board of India (IBBI)
IBBI is the regulator for overseeing insolvency proceedings of service providers like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India. It was given statutory powers through the Insolvency and Bankruptcy Code. It functions under Ministry of Commerce.
The Code provides for a market-determined and time-bound resolution of insolvency proceedings. It became operational in December 2016. It covers Individuals, Companies, Limited Liability Partnerships and Partnership firms. It attempts to simplify the process of insolvency and bankruptcy proceedings and speed up the resolution process for stressed assets in the country.
The Insolvency and Bankruptcy Board (IBBI) of India has notified two regulations in exercise of its powers conferred under section 240 of Insolvency and Bankruptcy Code, 2016.
The Insolvency and Bankruptcy Code, 2016 seeks to ensure time-bound settlement of insolvency, faster turnaround of businesses and create a unified database of serial defaulters.
These two regulations are IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016; IBBI (Insolvency Professional Agencies) Regulations, 2016.
- The two regulations provide (i) eligibility norms to be a Professional Member of an Insolvency Professional Agency (IPA) and (ii) norms to get registered with IBBI as an Insolvency Professional Agency.
- It allows company registered under Section 8 of the Companies Act, 2013 having a minimum net worth of Rs. 10 crore to be eligible for an IPA.
- The IPA should have over half of its Directors as independent directors and not more than one-fourth of the Directors can be insolvency professionals.
- It shall have Monitoring Committee, Membership Committee(s), Disciplinary Committee(s) and Grievance Redressal Committee(s) for the purposes of regulation and oversight of professional members.